Service Tax Non Deposit of Rs. 2.94 crs by Chennai Based IT Software Service Detected

[DGCEI, Chennai Press Note dated 22^nd September 2015]

Sub: Directorate of Central Excise Intelligence, Chennai Zonal Unit Arrested Director of a Chennai based Limited Company Providing Information Technology Software Services and Internet Communication Services for Failing to Remit the Service Tax Collected to the Government Exchequer.

Officers of the Directorate General of Central Excise Intelligence (DGCEI), Chennai Zonal Unit, Chennai arrested the Director of a Limited Company based at Chennai providing Information Technology Software Service and Internet Communication Service, for collecting Service Tax of Rs.2.94 crores from 2010-2011 to 2014-2015 and not remitting the same to the Government Exchequer.

2. Officers of DGCEI conducted Search at the Office premises of the Service Provider and seized certain documents. Upon perusal of the invoices raised by the Service Provider and other documents it appeared that the Service Provider has charged and collected Service Tax from their clients from 2010-2011 onwards but not credited the Service Tax so collected to the credit of the Central Government in contravention of Section 73(A) of Finance Act 1994. On enquiry, the Director has admitted that their company had collected and not paid service tax liability of Rs. 2.94 crores for the period up to March 2015 towards Information Technology Software services and Internet Telecommunication Services to account of Central Government for more than six months. In addition to that, the Service Provider has not filed statutory returns for the period 2013-14 and 2014-2015 with the department till date.

3. As per Section 89(1)(d) (ii) of the Finance Act, 1994 who ever collects Service Tax in excess of Rs.50 lakhs but fails to credit the same to the Government Account within a period of six months from the day on which such payment becomes due is liable for imprisonment for a term which may be extended to 7 years. Such offences shall be cognizable as per Section 90 of the Act.

4. The Service Provider was therefore arrested yesterday (i.e.on 21/09/2015) under the provisions of Section 91 of the Finance Act, 1994 and was produced before the Hon’ble Additional Chief Metropolitan Magistrate – EO II Court, Chennai who remanded him to Judicial Custody.